If you’re a chief information officer at a large or medium-size retailer that has embraced cloud computing while feeling the effects of Amazon’s rise, expect to get a call from a Microsoft salesperson this week.
CNBC reported Tuesday that Target, the massive online and offline retailer, is planning to move its business away from Amazon Web Services after apparently deciding it no longer wanted to fund its rival’s ambitions. According to the report, Microsoft, Google, and Oracle are eagerly lining up to pitch their services to Target, which appears to be running a hybrid cloud strategy with a portion of its workloads on cloud services.
It’s another sign this year that Amazon.com’s competitors are thinking real hard about their relationships with AWS, with the $13.7 billion purchase of Whole Foods perhaps serving as a bit of a tipping point. Wal-Mart is reportedly pressuring its suppliers to avoid doing tech business with AWS, which provides a huge opening for Microsoft and Google to target retailers or consumer goods companies who are being steamrollered by Amazon in 2017.
Cloud migrations are tricky: CNBC said the effort is expected to last well into next year, and it’s quite possible that Target decides some workloads are too well-suited for AWS to move them to another service just out of spite. Still, it seems pretty clear Target is done building new applications on AWS.
In an interview posted on Target’s web site last year, CIO Mike McNamara said “To me, there’s no question that technology and supply chain are the new battlegrounds for retail. The retailers with the strongest technology and supply chain will have the best chance of winning.”
Target and Amazon have had a rocky tech relationship for quite some time. The Minneapolis retailer actually used Amazon’s technology to build its first retail web site back in 2001, before eventually realizing that ecommerce was a world-changing technology that it needed to understand for itself, rather than allowing a competitor to control its web presence. Cloud computing is a little different, but the profits AWS is making from cloud computing fuel so much of Amazon’s overall business.
AWS operating income rose 27 percent year-over-year during its second quarter, and operating income of $916 million was actually less than it could have been thanks to the decision to make a few investments in capital equipment, Amazon said in July. While it’s not clear how much business Target was actually doing with AWS, financial analysts will be watching its performance even closer than usual over the rest of the year.
